Summary of events: in the first three quarters of 2023, the company achieved revenue of 2.72 billion yuan, an increase of 33.5% over the same period last year; net profit of 273 million yuan, an increase of 90.6% over the same period last year; and net profit of 259 million yuan, an increase of 122.2% over the same period last year. 2023Q3, the company achieved revenue of 892 million yuan, up 15.8% from the same period last year, down 7.1% from the same period last year; the net profit from the home was 89 million yuan, up 46.3% from the same period last year, down 20.2% from the previous year; and deducting the non-return net profit from 85 million yuan, up 40.5% from the same period last year, down 20.8% from the previous month.
Comments: both volume and price rise, profitability continues to improve
① volume: production and sales increased compared with the same period last year. In the first three quarters of 23, the company sold a total of 64961 tons of stainless steel seamless pipe and stainless steel welded pipe, + 20.44% compared with the same period last year. The sales volume of stainless steel seamless pipe / welded pipe products is 39651 tons / 25310 tons respectively, which is 28.13% compared with the same period last year. The sales volume of 23Q3 and stainless steel seamless pipe / welded pipe products were 13351 tons / 8659 tons, respectively, compared with the same period last year, the sales volume was 38.81% and 21.49% respectively compared with the same period last year.
Price: the level of gross margin continues to improve. In the first three quarters of 23, the price of stainless steel seamless pipe was 45631 yuan / ton, + 12.79% compared with the same period last year, and the price of stainless steel welded pipe was 27631 yuan / ton,-0.24% compared with the same period last year. 23Q3 single season, the price of stainless steel seamless pipe is 45521 yuan / ton, + 1.75% compared with the same period last year; the price of stainless steel welded pipe is 26817 yuan / ton,-8.93% year on year. In the first three quarters of 23 years and Q3 raw material stainless steel prices fell compared with the same period last year. In the first three quarters of 23, the company's gross profit margin was 16.78%, an increase of 3.16% over the same period last year. The company's gross profit margin was 18.60%, an increase of 3.67pct over the same period last year, and an increase of 1.24pct over the previous year.
Future core focus: product structure continues to upgrade, thermal power boiler tube demand release ① thermal power boiler tube bidding for continuous volume, super stainless steel pipe supply and demand is tight. In September 2022, the National Development and Reform Commission held a meeting on coal supply, which proposed that about 8000 kilowatts (equivalent to 80GW) were approved annually from 2022 to 2023, which would bring 200 million kilowatts of new installed capacity in the next three years, and the upgrading of old coal-fired power units would further boost the demand for super stainless steel seamless tubes. However, because of the high supply barriers between S30432 and HR3C, it is difficult for new manufacturers to quickly cut into the supply system of boiler plants, and the supply elasticity is limited, which is expected to support the price of thermal power boiler tubes.
② is actively increasing production and seizing the opportunity of market recovery. The company is one of the leading enterprises in the domestic stainless steel pipe industry, with an original thermal power boiler tube production capacity of 10,000 tons. The company's 20, 000-ton high-end stainless steel pipe project has been put into production, and the thermal power boiler tube production capacity can reach 30, 000 tons.
③ expands overseas markets and its product structure continues to upgrade. The company has jointly established a project with a domestic petrochemical giant to realize the localization of the convection section tube of ethylene cracking furnace in 2023. The commissioning of the company's 3500 ton precision pipe production line will build a moat for the company's high profitability. The company has formally passed the qualification certification of Ami supplier, and the approved products include stainless steel seamless pipe and welded pipe, which is conducive to further expanding the international market.
Investment advice: benefiting from the increased demand in the thermal power boiler tube industry and the continued release of new production capacity, we expect the company to achieve a return net profit of 3.80mm 504pm in 2023-25, respectively, corresponding to the closing price on October 27, PE is 11,9 and 8 times, respectively, maintaining the "recommended" rating.
Risk tips: project schedule is not as expected risk; raw material price rise risk; downstream demand is not as expected.